The Modi government is preparing a major tax revamp under GST 2.0, proposing a simplified two-tier structure of 5% and 18%. Touted as the biggest tax reform in eight years, the move is expected to reduce levies on a range of consumer goods and services.
- Likely to get cheaper under GST 2.0
- Small cars (GST cut from 28% to 18%)
- Everyday items like personal care products
- Air conditioners
- Televisions
Health and life insurance premiums (possibly reduced to 5% or even nil from 18%)
The revised rates are expected to be rolled out around September–October, coinciding with the festive season. Prime Minister Narendra Modi, in his Independence Day address, hinted at the relief calling it a “double Diwali” for citizens.
Currently, goods and services fall under four slabs—5%, 12%, 18%, and 28%—with luxury and sin goods taxed even higher. Under the new regime, consumer goods, auto, and insurance sectors are expected to benefit the most, leading to lower prices for customers.
Meanwhile, Congress leader Jairam Ramesh has urged the government to also address sectoral challenges in textiles, tourism, exports, handicrafts, and agriculture, and suggested incentivising states to bring electricity, alcohol, petroleum, and real estate under GST in the future.